Heavy Competition is Beneficial for Startups


 
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Heavy Competition is Beneficial for Startups
Jaap de Jonge, Editor, Netherlands

Having studied tax data of 2 million companies that were launched in the UK between 1995 and 2005, Andrew Burke and Stephanie Hussels in a short article "How Competition Strengthens Start-ups" (HBR March 2013), report that companies launched in crowded markets had higher odds of failure in the first year, but once they survived this year, had a much greater chance of surviving the first 3 years.
Competition apparently helps startups thrive... The authors explain this effect by stating that a challenging environment causes young firms to focus extra on satisfying client needs on one hand and keeping costs down to a minimal level on the other hand.
They advise venture capitalists not to spoil young entrepreneurs with too much seed capital as this might decrease the appetite to build a lean, low cost company.
 

 
Heavy Competition is Good for Start Ups
Gandhi Heryanto, Management Consultant, Indonesia
Yes, off course as a start up we can learn a lot about our business and customers by looking at how our competitors do business:
- How they are approaching the market.
- What are their weaknesses and strengths.
- How we can improve upon the competitionís approach.
All this while understanding the lifestyles, demographics and psychographics of our ideal customer.
 

 
Heavy Competition is Beneficial for Startups
Badmus bola, Analyst, Nigeria
@Gandhi Heryanto: It goes beyond this. It is at this time start ups decide what strategy to adopt and get set for the war zone (competition) one of which is to quickly reach the break even point.
Is the young company ready to give the fight, that is: adopt a red ocean strategy, or, if considerable resources and ability to face the consequence(s) of this strategy are available, the company may opt to go for the Blue Ocean Strategy.
In either case, I totally agree that startups require heavy competition.
 

 







 

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